Just as companies have invested in sales automation and enablement to drive sales productivity and in marketing automation to increase lead generation and brand awareness, hundreds of organizations have invested in Customer Success Management solutions to maximize client lifetime value and advocacy. In our benchmarking study of over a hundred Customer Success leaders (which we mentioned earlier in this book), we found a 33-percentage-point increase in Net Retention by optimizing Customer Success operations. If implementing a CSM solution can help you achieve this increase, anyone would be crazy not to do it.
In fact, we recently met one CEO of a large private equity–backed software company who connected CSM software with his company's strategy in the following way. This CEO had undertaken a massive transformation of his company from a traditional on-premises perpetual license model to launching a brand-new cloud offering. He had made significant changes in culture and leadership to embrace this new mindset. He felt that the last mile was “industrializing Customer Success.” In this CEO's mind, it wasn't enough to have the right people with the right culture. “Our customers are telling us that our people are great but they still aren't working off of a consistent and coordinated set of playbooks.”
And many companies are acting on this insight. Consulting firm Deloitte published a report, 2019 Enterprise Customer Success (CS) Study and Outlook, in which they found under the heading of “What CS capabilities are seeing the greatest increase in investment?” that the “top-two areas where nearly one-third of CS leaders indicated that they plan to increase investment by greater than 10% are talent acquisition and technology enablement.”
But just as Customer Success needs to transcend your organizational silos, so does your Customer Success technology. That means Customer Success teams need to think carefully about when, where, and how to deploy a CSM solution for maximum business impact. That said, most mature Customer Success organizations have found that there is no point of “perfection”—that you need to move fast and iterate as you go. Ed Daly, senior vice president of Customer Success and Growth at Okta, notes, “Perfection is the enemy of progress and waiting to implement Customer Success until it's perfect is a guaranteed approach to losing revenue. Much like an agile software development process, an effective Customer Success effort requires fast iterations, failures, learnings, and improvements.”
In this chapter we share the steps companies should take before buying a CSM platform based on our learnings from more than 700 Gainsight deployments. These steps will help you put in place the strategy, data, and processes to drive success.
Is Customer Success Art or Science?
It seems like something from a different lifetime, but we still remember the old days when Sales was all chalkboards, steak knives, and “gut feeling.” Okay, maybe chalkboards were before our time. Also, Nick is vegetarian and doesn't really need steak knives. But gut feelings—those were definitely the name of the game back in the day.
There was a time when the prevailing attitude was that selling was an art—unquantifiable, nonsystematic. Sales has gone through a “Moneyball” transition just like baseball—the art is still there, but the science has developed so much more.
Fast-forward to today. If you're starting a new company, you often define your sales process, identify your key metrics, and set up your Customer Relationship Management (CRM) system before you hire your first rep. That's an important development because companies are now able to start testing and learning in their sales process at a much more rapid rate.
The problem with the rock-star seller who somehow just closes is that it's not repeatable. It doesn't scale. And it will stop working eventually and leave you with no answers and no way forward. But that's a well-known and broadly accepted premise—at least in Sales.
So why is this functional initiative called Customer Success Management—a peer org but an evolutionary successor—reliving the 1990s (and not in the feel-good-music way) in its approach to hiring and processes?
We've met with thousands of new CSM leaders from teams all along the spectrum from startup to enterprise and from every industry, and we (surprisingly) frequently hear things like:
“My team isn't comfortable with process.”
“It's not really about metrics—it's much more about gut feeling.”
“We're hiring a team and then are going to figure it out.”
Let's address each premise individually:
“My team isn't comfortable with process.”
Much like their colleagues in Sales, we think these new CS leaders will realize over time that, unlike what Alec Baldwin says in Glengarry Glen Ross, coffee isn't for closers. Instead, coffee is for consistency. By that we mean that the most effective businesspeople in Customer Success will develop consistent and data-driven ways to execute, and more importantly, to learn.
“It's not really about metrics—it's much more about gut feeling.”
Consistency is important because Customer Success has another thing in common with Sales: It's a results-oriented business. It might not be as brutally quota-driven, but retention is a critical number to make for any company to grow. No CSM should be fired for “losing” a customer. But every CSM should be able to understand and explain why it happened and how to improve the process going forward. You can't do that without data.
“We're hiring a team and then are going to figure it out.”
Many practitioners of the “gut feeling” school of CSM feel like “you need to get people right and then you can figure out process and tools.” To the same coffee closers, we say this: If you hire a team with a mandate of “figure it out,” then good luck getting that team to then embrace data, process, and systems down the road. You may get lucky, but more often than not, you'll get an army of people who believe nothing can beat their magical intuition.
Intuitive CSM vs. Predictive CSM: We see this mentality in the real world all the time, and we want to consciously push back against it: while it's true that nobody knows a customer as well as their CSM, you cannot make accurate predictions without objective measurements. This is true in science as it is in CSM. In this book's language, we're talking about health scores, but you can call it what you will.
Because of this fact, we've noticed that many of the newer and earlier-stage CSM teams are far more sophisticated than the ones that have been running for a while. Earlier CSM teams were often built like earlier sales teams—where swagger and heroics were rewarded and careful analysis was laughed off as “we're not ready for that yet.”
Newer CSM teams are realizing that the foundation you build at the beginning is the one you will live with years from now. Our advice is, if you are starting a new CSM team, start it with a scientific approach from day one.
Project Plan: What Does a Best-in-Class Evaluation Process Look Like?
Buying a Customer Success solution isn't (and shouldn't be) done with the same level of spontaneity you might buy a one-click point solution for something that solves a very specific, limited business problem. Entering your evaluation process with a well-thought-out plan will get you to driving outcomes much faster and with better results. Here's our recommended 11-step process for purchasing a CSM solution:
Evaluation Team: Identify the cross-functional evaluation team.
Business Case: Create a business case to quantify the value of a potential investment.
Project Plan: Create your plan for evaluating solutions.
This outline is a good starting point.
In addition, if you haven't been through a procurement process in your company, research what's been involved for comparable decisions.
Do you have a standard vendor audit process? A security review? A compliance review?
Vendor Research: Determine your short list of vendors to evaluate by reading online reviews, talking to peers, and reading analyst reports.
Request for Proposal (RFP):
Create evaluation requirements for the RFP.
Send the RFP to potential vendors.
Review responses.
Score responses.
Select finalists.
Solution Presentations: We recommend breaking it up into three meetings—ideally on the same day for logistical convenience.
Management/End User Demo + Roadmap Review
Technical Architecture + Demo
Executive Demo + Business Case Presentation
References: Conduct reference checks and read online reviews of the finalists.
Proof of Concept: If needed, we recommend conducting a Proof of Concept (POC) to make sure the solution works for you. We highly recommend this if you have a nontraditional business model.
Solution Design and Scoping: Define a detailed scoping of the project to understand costs and timing.
Selection: Select the final vendor.
Commercials: Finalize the commercial agreement.
In the rest of this chapter we'll offer tips for ensuring that each phase is successful.
Evaluation Team: Whom Should I Involve Internally in the Evaluation Process?
One of the biggest mistakes you can make in a CSM platform rollout is to operate in a silo. As we've discussed at length in this book, transforming your company to be more customer-centric requires cross-functional buy-in. We'd recommend using the RACI decision-making framework (see Figure 26.1) by defining who is:
RACI
ROLE
QUESTIONS
Responsible
Customer Success or Business Operations Lead
Will this meet our business requirements?
Are we ready for this?
IT Project Manager or Business Analytics
What's involved in launching this and running it?
How will this work with our existing stack of systems?
Accountable
Head of Customer Success/Account Management
Is this the right partner now and long-term?
How long will this take to get up and running?
Head of Sales
Will this help drive revenue?
Head of IT
Will this scale?
Consulted
Pilot Customer Success Managers or Account Managers
Will this improve our efficiency?
Pilot Sales Reps
How will this fit with my existing sales workflow?
Data Team
Can this handle our data?
Informed
CEO/GM
How does this help us strategically?
Will we be successful with this?
CFO/Finance Lead
How much does this cost—directly and indirectly?
Is this worth the investment?
Head of Product Management
Can this help me make better product decisions?
Head of Marketing
How can this help us scale our customer engagement and customer references?
Head of Services
Can this help me drive services revenue?
Head of Support
Can this help me prioritize and better handle cases?
Accountable: The team that will own the business process related to Customer Success
Consulted: The team that will be using the CSM platform daily
Informed: The team that needs to approve the investment and will be affected by the results
Business Case: How Do I Define the TCO and ROI for This Project?
Frequently, business leaders go too far down the path of an IT project without understanding the cost of ownership or the value they should expect to derive. We recommend doing the heavy lifting of projecting the ROI and Total Cost of Ownership (TCO) upfront, before you dive into the details of the technology itself. A business case could involve several components:
Assessment of the current state of Customer Success processes across the company
Benchmarking of current state versus “best-in-class”
Proposal for improvements
Calculation of TCO of improvements, including:
CSM platform licensing costs
CSM platform vendor or partner onboarding services costs
CSM platform vendor or partner ongoing services costs
Internal IT and operational onboarding time and implied costs
Internal IT and operational ongoing time and implied costs
Change management time and implied costs
Data preparation and integration time and implied costs
Projection of ROI of improvements by customer segment, including:
Reduced churn
Increased upsell/cross-sell
Enhanced operational efficiency
Strengthened customer advocacy
At Gainsight we offer Strategic Advisory Services to help our clients define a business case, including by benchmarking the client against a set of best-practice processes. In addition, many third-party consultants can help with this process. We find this external advice helps Customer Success leaders gain the buy-in of the CEO, the CFO, and other stakeholders, and also helps the champion crystallize in their own mind the outcomes they want to achieve by using the software—a sense of clarity, which will contribute to the success of the deployment later.
Vendor Research: What Are the Available Options?
When was the last time you made a major purchase without doing some online research? When our Sales & Marketing teams interact with potential Gainsight buyers, it's extremely—and increasingly—rare that they haven't read at least a few third-party assessments of our software and technology. It's not purely peer-generated content, either. Most of the leading analyst firms, such as Gartner and Forrester, have published research on CSM platforms. In addition, verified online review sites such as TrustRadius, G2, and AppExchange can be very helpful. Finally, we recommend checking out the market comparison charts that show the differences between vendors, available on G2 and similar sites.
RFP: What Functional and Platform Requirements Should We Look for in a CSM Platform?
CSM platforms, if implemented well, integrate deeply into your data stack and business processes. At best, they're capable of transforming your operations on a fundamental level with cascading improvements throughout your company. As such, we recommend a careful evaluation of your requirements and of vendor capabilities. Some companies make decisions based on merely one demo and “gut feel.” While that can sometimes be effective, in the end the client often doesn't achieve the outcome they're looking for. In fact, they may not even really realize what outcome they wanted to achieve until their platform has failed to achieve it.
The most sophisticated buyers of CS platforms are focusing their assessments on the following three capabilities:
Functionality (Driving ROI): Our customers consider six types of functionality to be the core “pillars” of a CSM platform:
Health: A capability to view a “scorecard” of the health of a customer across many dimensions (e.g. Support health versus Adoption health versus Relationship health) and across the various entities within a customer (e.g. by product, business unit, geography, etc.). Furthermore, you should be able to drill into the details of customer health, such as account notes, support history, survey responses, key sponsors, or usage statistics.
Workflow: Tools to translate insights about customer health into action. These typically include a system for identifying actions that need to be taken, defining best-practice steps for those situations, parsing out work between CSMs and other team members, and integrating with other task management systems like Salesforce. Furthermore, Workflow often involves providing visibility into these actions in internal communication systems like Slack. Finally, CSM platforms increasingly include proactive ways to define desired client outcomes and plans to achieve them.
Communication: Tools to automate and personalize communications throughout the Customer Success lifecycle. These should enable all “touch models,” from high-touch capabilities like automated Executive Business Review (EBR) PowerPoint creation to mid-touch tools like prewritten trackable emails, data-driven email nurturing, and in-application messages.
Analytics: Most customers buy CSM platforms not only to optimize day-to-day operations but also to make strategic decisions across their business. As such, best-in-class CSM platforms include deep analytics capabilities, such as fully customizable reporting with graphs and tables, integrated data processing/aggregation/pivoting/trending, simplified cross-data-set joins and views, and personalized per-user dashboards.
Surveys: Customer Success is about looking at data, but only in the service of understanding and gaining insight into customer relationships. Your data is only useful as far as it can uncover meaning that you can take action on. Most CSM efforts involve bringing together an objective (data-driven) and subjective (sentiment-based) view of client health. Therefore, most buyers want functionality to capture customer feedback via surveys. Surveys may be sent after individual transactions (e.g. after the sale, a support case, a project closure, etc.) or on a regular basis to assess the overall client relationship. This category of functionality also includes capabilities to close the loop in following up on survey responses in a consistent way. Because customers are typically all over the world, surveys need to be sent in multiple languages and aligned to multiple time zones. Finally, many companies look for analytics tools to process and assess survey results—including survey text analytics.
Apps: Finally, customers want to make sure CSM doesn't become an “island” in a company and that it's exposed to all of the parts of the company that can drive Customer Success. CSM platform evaluations often include evaluating the app and experience for each stakeholder:
CSM
Sales rep (in systems like Salesforce Sales Cloud, HubSpot or Microsoft Dynamics)
Support rep (in systems like Salesforce Service Cloud and Zendesk)
Services manager (in Professional Services Automation systems like FinancialForce)
Marketing manager (in terms of reference management capabilities, for example)
Product manager (in terms of product usage analytics)
Finance team (in terms of revenue and renewal forecasting)
Partners
Platform (Managing TCO): While the end-user functionality seen above is what the business users care about, IT and Operations will only be able to deliver based upon the depth of the platform itself. We've seen companies look at these aspects of platforms to understand them better:
Data Integration: CSM platforms depend on data. How does data enter the system? What data sources are supported? Sources to consider include:
Data via Amazon S3
Data via API
CRM (Salesforce Standard Objects, Salesforce Custom Objects, Salesforce Third-party Apps)
SFA (e.g. Salesforce Sales Cloud, Microsoft Dynamics, HubSpot)
Web Analytics (MixPanel, Segment, Google Analytics)
Finance (Netsuite, Zuora)
Surveys (SurveyMonkey, Medallia, Qualtrics)
Human Intelligence/Scoring
Social Media Data (LinkedIn, etc.)
Company News Updates
Open Data Model: Because CSM systems are truly platforms, customers often need to constantly expand and evolve the data model. Make sure you verify that the platform allows you to add custom tables, fields, calculations, and other factors in administrative UI. Also determine if the platform can handle data processing (e.g. aggregation, pivoting, trending, etc.) or if you need data to be preprocessed. Finally, determine how flexible the customer model is. How many levels can the hierarchy handle? Can you add multiple dimensions (e.g. products) at various levels of the hierarchy? Does the scoring model allow you to granularly track multiple elements of a health score (e.g. support health, services health)?
Salesforce Integration: Every CSM platform should integrate with CRM systems like Salesforce. As with most technology, the key is to get really specific about the depth of the integration. Is the data in the CSM platform integrated with the data in Salesforce? Are all custom objects available at all times to users? Is the CSM platform available 100% through the Salesforce UI? Is it available through Salesforce apps like Service Cloud and Community Cloud? Can your users update Salesforce fields directly from the CSM platform?
Self-service: Customer Success is evolving rapidly and CSM teams want to stay on the cutting edge. As such, they need to be agile in changing the platform configuration. Leading customers demand a CSM platform that allows for easy configuration of reports, dashboards, rules, custom attributes, formulas, tables, and other factors without having to call the vendor. Furthermore, they look for online resources like a knowledge base, support chat system, and online community to get fast assistance.
Best Practices: No CSM team wants to reinvent the wheel. Customers are looking for platforms with built-in best practices—preconfigured playbooks, email templates, surveys, reports, and the like that represent the best of what's possible in Customer Success.
Role-based Access: A CSM platform should be able to reconcile the dichotomy between having role/team/function-based tailored view and access and the free exchange of relevant information across teams. Your CSM platform should have:
Page layouts tailored to the needs of each function: The ability for different teams to have a tailored view of the customer is essential to bubble up the right issues and opportunities to the relevant person. Custom page layouts also eliminate clutter while promoting cross-functional collaboration.
Federated access: Any reasonably sized business that has multiple business lines faces a tough choice: deploying each of its business lines on its own customer management system or forcing them to operate within one restrictive, shared environment. It does not have to be a choice if each team can configure and use the platform to meet their specific needs while remaining within one overall environment.
Security: You are entrusting the CSM platform with a lot of sensitive information, such as customer data and business critical information. Any CSM platform should have:
Sophisticated user access permissions based on roles/profiles
Independent security certificates such as SOC 2 Type 2
Company (Partnership with the Vendor): Because the CSM platform is a long-term decision, customers often evaluate the company as much as the product. CSM platforms are evolving rapidly, so they want to assess not only where the technology is today, but also where it will be over time. Key questions include:
Customers: Who are the vendor's customers? How big are they? In what industries are they? How relevant are the customers to your business?
CSM profile: What is the background and profile of the CSMs with whom you'll be working from the vendor? How many people work in their CSM organization?
Services: What initial technical services are available from the vendor to set up the platform? What advisory services are available to help with CSM strategy? What ongoing Technical Account Management and other services are offered? How many people work in Services?
Partners: What partners are enabled to deliver services around the platform?
Community: What kind of community exists around the vendor? Does the vendor have local chapters in my area to interact with likeminded peers? What customers are in the community? How robust are the company's events? How active is the vendor's online community?
Vision: What is the vendor's three-year roadmap? What is its investment in R&D to enable innovation? What's the pace of release and recent release pattern?
Viability: How big is the vendor today?
Since most of the above aren't yes/no questions, we recommend scoring each response—for example:
5 = Vendor has strong capability with strong demonstrated evidence.
4 = Vendor has strong capability with demonstrated evidence.
3 = Vendor has strong capability.
2 = Vendor can customize/stretch to meet need.
1 = Vendor doesn't have capability.
Solution Presentations: What Should We Cover During Our Reviews with the Vendors?
Since the CSM platform decision is a cross-functional choice, and therefore many people may be involved, it's important to break up the reviews into manageable chunks. When Gainsight demos software for prospective customers, we're extremely intentional to understand and document the outcomes they want to achieve. Often, they might not be sure, which is why it helps to have a prescriptive approach based on many hundreds of success implementations. To get a sense of what that prescriptive process might be, you can always start up a demo process with Gainsight today at gainsight.com/demo.
The most successful clients have already internally discussed their desired outcomes coming into each of the following three recommended meetings:
Management/End User Demo + Roadmap Review
This is a meeting (typically two hours) for the head of Customer Success/Account Management, head of Sales, and Pilot Sales reps/CSMs/AMs to understand the business value of the platform and user experience. This includes covering:
Customer experience impact from platform
Quick view of CSM/Sales Rep experience
Management experience and dashboards
“Day in the life” of a user
Looking up information on a customer to prepare for a call
Managing your workload and action items
Collaborating with others
Sharing information with clients
Having the vendors demonstrate how best practices are built into the product and experience
Roadmap and vision
Technical Architecture and Demo
Given the technical platform considerations above, clients typically review the platform in detail with IT, Business Operations, and the Data Team. This includes:
Architectural overview
Integration overview
Security overview
Administration demo
Executive Demo + Business Case Presentation
Finally, the savviest clients tee up a quick (30-minute to one-hour) presentation for senior executives (CEO/GM, CFO/head of Finance) to see the output of the system:
Executive dashboard demo
Business case overview
High-level project plan
References and Proof of Concept: What Steps Should We Take to Vet Our Preferred Choice?
Even once you've developed a preference for a vendor, you're not quite done. We recommend pursuing the following four steps to build your conviction:
References: As in hiring, vendor reference checking is an art. We recommend extensive diligence in references to make sure you understand the true customer experience. In particular:
Ask the vendor for references that are similar in size and business model to you.
Look for “backdoor” references via LinkedIn.
Find customers that have left the vendor.
Find customers that moved to the vendor from other solutions.
Proof of Concept (POC): While not always necessary, a POC can be helpful in assessing technical fit. In particular, if you have:
Complex source data
Sophisticated customer hierarchies
Diverse user populations
Variable workflows
POCs can be helpful to get beyond the demos to the details. If you conduct a POC, we highly encourage you to load “real” data (perhaps anonymized) into the platforms.
Selection: We recommend taking all of the data above and bringing the Evaluation Team back together to make a careful decision.
Solution Design and Scoping: Finally, make sure you understand the services scope of work and project plan in detail. Meet the onboarding team, understand their backgrounds, and assess the validity of the methodology.
The Importance of Getting This Decision Right
When we put together this evaluation process, we were very careful to stick closely to an “outside-in” perspective. What would be most valuable to a buyer agnostic of their ultimate selection? As important as it is for us to sell people on the value of Gainsight specifically, it's even more existential for us to help Customer Success teams and leaders succeed in delivering on their customers' desired outcomes as part of a broader movement. What's good for customers is good for Customer Success at large, which is good for us in the long run.
And make no mistake: Of all the technology or services purchases your company will make, the stakes have the potential to be uniquely elevated when it comes to a Customer Success solution. In some cases, companies can afford to (relatively) casually or indiscriminately invest in software because either the cost or impact or both are low compared to more costly or transformative implementations. It's not so—nor should it be so—with Customer Success. Your technology vendor could be an essential strategic partner to you in transforming your company.
Summary
In this chapter we recommended pursuing a thoughtful plan when aligning your company around a choice of CS technology. We emphasized the importance of certain functionality in that technology, but we emphasized equally the importance of choosing a vendor who can be a long-term, strategic partner to your business. Your CS platform, when supported by the right partner, can be one of your greatest assets in bringing all functions together around the success of your clients.
Another great asset in your CS transformation is your people, the topic that we'll address in the next chapter.